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tv   Squawk on the Street  CNBC  November 12, 2019 9:00am-11:00am EST

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final check on the markets, up 7 1/2 that would be a new high president will speak at the economics club today, probably likes new highs when he's talking. thank you. we'll see you again and make sure you join us tomorrow. "squawk on the street" is coming up next. ♪ i feel so close to you right now ♪ ♪ it's a force field ♪ i wear my heart up on my sleeve ♪ good morning, welcome to "squawk on the street. futures largely unchanged here as the market awaits the president speaking at noon we'll look for any news regarding u.s. china trade, relief and more. road map begins with the latest volley in the streaming wars, disney enters the fray,
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officially launching its disney plus platform. >> goldman sachs customers, concerned about gender bias allegations, says, quote, we hear you, the bank re-evaluating the apple card credit limits >> billion dollar cost cuts, juul labs set to slash 16% of its workforce. we're going to begin with disney entering the streaming wars, the company's disney plus service launching today with a monthly price tag of $6.99 subs will have access to nearly 500 films, 7500 tv episodes, disney has spent more than $3 billion on technology and content prior to the launch. it is a big deal for kevin mayor, in charge of making this thing work and we have seen some technical hiccups here on this first day. >> overload. maybe high quality problem, not sure but i looked at all the offerings, i said to myself, when i had two little girls, i think i would have said, no, i don't have to go anywhere this is it, you go do that, and then i can go watch football in the
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other room that was my thinking and then the mand loalorian was promoted heavily. >> jeff goldblum, storm troopers >> i used to have wear on monday mornings, let's say the redskins were playing, i would have to wear a redskins helmet why? that's the name of the game. david, at one point -- i'm sorry, you're jammed over there. at one point i said to myself, hey, listen, that's the way it -- it is promoted ultimate fight club is promoted every 35 seconds on "sports center." we're all in a situation where nobody can do what they used to do, which is just be nonpromotional except for little more subtly, so much is at stake. i do think when i looked at that, it is just a natural for those of us who had -- little
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kids and you look at it and say, well, there it is. that's all under one roof, i'm buying it. if you're me, it is, like, i'll wait. >> interesting disney had a long evolution in their thinking regarding streaming. we talked to bob iger in 2015 at the time about the threat of netflix and this is what he told us. >> we view netflix as friend, not foe. no reason for us to beat netflix. we're taking advantage of netflix's great growth and maybe we helped netflix's great growth >> that was the thinking among many >> i'm going to go right now, right now, here's the deal jim mcnerney, the great boeing ceo, i said to him, you know what, i see all these companies, and they always say, you know what, we're really friends, it's good how about you and airbus he said, i hate airbus what do you mean what do you think this is, harvard/yale he said, airbus is the enemy they're the enemy for heaven's
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sake come on. can we stop with the friend thing? there is no friendship you don't -- there is no friend -- you think jamie dimon is good buddies with broin miia moynihan he wants to take his customers >> that's what competition -- >> business is about taking the other guy's customers. reed hoffman said over and over again the more the merrier >> reed hastings. >> reed hastings >> couple of reeds >> enough with the friends enough with the friends. >> they were collecting nice sized checks from netflix for a long time. >> right but no more. now it is, like, look, there is only so much money >> there it is >> how much money do you have in. >> that's the question >> isn't that the issue? >> that's ought there for the consumer now they add up to -- depending what you want to choose and what level of service you want, it can add up to a significant amount of money for the average family. >> you saw the harris poll yesterday. harris poll said that average
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americans are willing to spend how much per month $44. >> i have the $50 skinny bundle from verizon i only get -- what >> a few thoughts here, though. >> here we go. >> really? you've been talking for five minutes. i can't say one word >> you know why i was talking? because you were doing this. >> i was looking at something important. >> i apologize. >> the fact is -- >> are you my father >> the amount of money spent on content is reaching all time -- reaching levels we have never seen disney going to be spending a lot. they have done an enormously good job of getting their shareholder base ready for it, accustomed to it and willing to take whatever it is because they believe in the product netflix will spend over $14 billion this year. amazon at least $7 or $8 cbs reports earnings, they talk about increase investment in content, including higher number of series produced from multiple
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platforms and direct to consumer streaming services at some point a shakeout how much can hbo max spend john stankey and i having that conversation a couple of weeks ago. they launched their product, which will be $14.99 can they go all in will apple really come to the party continually increase their output and their content spend? these are important questions, and then you step back and look at business model that existed for the last 20 to 25 years why we can sit here and feed our families well and it is going away >> we're going velveeta. >> will this be as profitable as that was >> no, it was a once in a -- it was fabulous while it lasted >> it was good, wasn't it? >> it was fantastic. >> we had cable access, i can watch high school lacrosse. >> 100 million people pay you, evenly though only a handful -- >> you get to runned edrun ads. >> espn hit a million subs, it
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went up. 100 just for women. >> the ocho. >> ocho. >> loved that one. >> i continue to believe that like these millennials, they have the verizon bill or at&t bill, their phone bill, which is -- unless they fob it off on parents they have to smoke their juul because everybody is smoked by juul, how much does juul cost each month now they have to do this they don't have the time i was with strauss zelnick take two and they can't -- can they - can they do grand theft auto while they're watching the new "star wars" and ordering from grubhub, can they do all these things and also, like, homework for their jobs or are their jobs just, like, at dean foods. >> reed hastings fam s famous l, his competition being asleep. >> i don't sleep and i still don't have time for this stuff i'm fitchfixing my lineup at 3:
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a.m. >> you're a sleep disturbed man. >> i am. have i ever held that back >> no. >> thank you. >> jim mentions juul, juul confirming to cut costs by a billion dollars next year, cutting 16% of the workforce company is marketing unit among the areas affected and that comes less than a week after juul halted the sale of its popular mint-flavored ecigarettes. 650 jobs, i'm not sure if they're all in san francisco, but that's a fair amount of -- >> this is real. i think this thing is unraveling pretty quickly really fast. they didn't do them any favors with those -- remember, the whole wrap was, if we stopped putting out the flavors, the mint flavors, the flavors that really -- you know what will do it chinese. what kind of -- there is a real good alibi guys, that's an alibi, huh kronos reported, marijuana, marijuana is doing pretty --
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hey, this is good. doesn't kill anybody keeps you off oxy. >> what is interesting with juul is that to see the private market valuation and where it is getting marked by a number of the investors was about a few weeks ago reported there had been a trade at 90 i don't think many have come down to that level we saw altria bring down its value of the stake that it paid $12.8 billion for 35%, which valued juul at the time for 38 billion. it went up from there to crash since we had -- >> any sense of why softbank -- why softbank didn't come in at 40 billion >> that's a joke, right? >> is it i was work on uber, grubhub -- uber, you know, door dash versus -- >> yes >> i just find themselves in some sort of existential crisis and that's softbank, to be so
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stupid about so many things. not long-term. long-term, what are we long-term? >> it is 300 years, masa has a 300 year view. >> ted williams and cryogenics. >> people say it was a once in a lifetime -- it was, but he decided not to sell it when it was 10 bag or 15 bag or 20 bag, but wait. >> he got that one right maybe that's all you need. >> he did decent things when it came to -- yahoo! japan. >> he's a genius, all right. >> it is a mixed picture certainly lately softbank and the vision fund have inflated values far beyond. they have given more to companies that should not have them, all they do is spend money and may not end up being a profitable business to begin with. >> john ledger from wework it all different. >> reuters now says he's not a
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leading candidate. >> i don't know. he's one of a number of candidates, carl they're conducting a search. we knew that yesterday we know that today the chairman has taken over essentially the leadership in some way of the softbank controlled wework. knows him well from their negotiating on -- to get a sprint team mobile deal done as i said a number of times here, ledger is going to leave t-mobile, the deal is done this guy has been promoted to president. he's going to take over. and they haven't announced that. that's what everybody involved has indicated to me. i said it any number of times. i don't know why it was a surprise, might be looking for a new challenge. >> you are not ledger's idol >> why >> says cramer is my idol. sorry, david. >> there you go. that's the truth >> is that idol as in, like, i'd -- >> idle? idle as he watches the show?
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>> he's on -- i thought he was on -- >> which kind of idol is that? >> how is peloton doing, by the way? that quarter was pretty good and they dropped the bomb by saying -- it was a good quarter. >> we had john on that day he called it a head scratcher. >> he did. trying to understand why the stock was down so much something during the call. >> committed to losing money that was on the call >> we're talking peloton now, just to make sure people understand >> yes i said, you know what, there is a peloton i like, and one i didn't like, the guy who said he's going to spend a fortune. those ads are so good. i feel like sweating when i see the ads. >> i want to come back quickly to something i said before, the sprint t-mobile trial that will start december 9th is going to be very important. >> why is that >> it connects to softbank, connects to ledger who you were mentioning and it connects to charlie ergen who has to be a
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star witness there in some way, arguing that he's going to be a real competitor when it comes to na nationwide 5g. the wholesale agreement, it is going to be interesting and less than a month away from beginning and that will perhaps, you know, decide his fate too. that deal doesn't happen, then what happens >> wow. >> right >> that would be shocking. >> you talk about softbank, that would have an impact. >> sprint's balance sheet. it must happen remember when david said that time warner would really help at&t's cash flow how right you were this has to happen too that was a great deal. great american >> great american soul >> good for -- good for everybody. to see where at&t stock is. >> they had a good year. >> cash flow from -- >> first year not so good. this year was quite good
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>> they have done something for me lately, as opposed to your softbank. >> you're not happy with softbank, are you? >> the whole uber, wework thing got in his head. >> door dash. >> uber eats grubhub. then it connects to the restaurant somehow something happened there. >> door dash brought caviar. he's right and that was the end we were caviar, next thing i know we're door dash. >> door dash is the only food delivery online that gained share, acording to edison research. >> if you go to your machine, you'll see they suddenly are your provider, even though you didn't make them. >> they have the suburbs >> the suburbs they own the world hurting dominos, hurting yum, everybody, hurting cramer. crushing cramer. >> we come back, cramer's mad dash and opening bell. we await the president around lunch time don't go away.
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♪ all right, let's get to some stocks we want to keep an eye on this morning jim's mad dash, of course. we also have an opening bell a few minutes from now
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chem et. >> we need consolidation this is ceramics semis, capacitors, they go into film, electrolyte d-- they are automotive, okay this is a buy by a taiwanese company that is really a competitor and now, david, i know it doesn't hit your radar screen, it is not even 2 billion, 1.8 billion, but the point is that -- >> glad you did it. >> when you look at the companies that do semiconductors, there is way too many of them there is really fabulous synergies when they get together that's why i thought that cyprus should have been bought a long time ago you put all these under one roof, and they really need -- i have micron tonight. there is three companies in the world that actually make d-rams. and they're very expensive to make big capital equipment. this makes sense we ought to be looking more at these companies, companies that make a lot of sense, particularly for 5g. >> does regulatory come into this, though >> yes
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>> in general in terms of consolidation call samer in china >> these have to be under the radar, right like is it worth anybody's time to try to stop this deal with taiwan you're right, though, maybe the chinese try to throw a wrench into a taiwan company because they're not exactly pals. >> no. >> that's a very good point. >> like -- >> that would be a great test, it would mean they got lawyers, and bankers, who said, listen, this will go through, as we wait for nvidia to close with mellanox this is a great -- this is what we need. if you want this group going, we need more consolidation. it was great analog devices was on the prowl and texas instruments, obviously broadcom, now broadcom switched to software that is domestic because they're afraid if this would have been a good -- >> also became a u.s. company. >> a u.s. company. >> yeah. >> david, softbank not involved. >> got it. all right. opening bell ten minutes from now.
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stick around more "squawk on the street" coming right at you. it was sophie's big day. by the way, she's the next mozart. as usual we were behind schedule.
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markets on hold ahead of the president's speech at noon in new york city, when we'll be looking for headlines regarding u.s./china trade and tariffs in the meantime, the opening bell is in just about eight minutes.
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you're watching cnbc's "squawk on the street. live from the financial capital of the world, the opening bell in just under five minutes on this busy tuesday as we await the president's speech at noon we are keeping our eye on goldman, and apple goldman sachs is responding to allegations of gender bias, when it comes to determining apple card credit limits the ceo of goldman sachs out with a message to customers
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saying, quote, we hear you, our concerns are important to us, we take them seriously. we have not and never will make decisions based on factors like gender in fact, we do not know your gender or marital status during the apple card application process. she added anyone unhappy with their credit limit for the card can appeal, and goldman may re-evaluate their credit line, a lot of responses to this on twitter, obviously, where it began. >> right, i do think that both companies were not ready for the blowback i think both companies don't understand this industry from the point of view of how sensitive people are, and how voluntary fi vociferous they can be they were doing what a lot of people thought were righting i like the fact they're saying, listen, maybe we have to be more transparent. and that is true they have to be more transparent. but what they should have done is said, okay, let's figure out what best practices are. as opposed to saying, we're all gender neutral there are some people who would have said, you know what, if
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you're gender neutral, that does discriminate per se against women. women make less than the workforce than men i think they just said, you know what, we treat every person equally not realizing that some people are more equal than others, not unlike 1984. >> yeah. doesn't help that they have said from the outset they're not going to give us a lot of granular data on this card, on this product. >> you can't do that you got to go by, not that i think you do whatever jpmorgan says, but you need to cover of what the other guys do i would have canvassed and said, okay, here is what we think -- if i were them, i would say, we don't like -- here's what we think. thisis the gold standard as we see it please tell us if you think we're wrong. they went in a little bit too sure of themselves in an industry that is not necessarily a -- it is an industry that is very competitive and i also think a lot of the practices are a little different from the way apple and goldman handle things. >> absolutely. >> you agree with me
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>> sure. >> the credit card business is a tricky business. >> can be. can be >> speaking of people's personal information, i'm sure you guys saw this wall street journal story that -- >> operation grand slam. >> has been collecting the personal healthcare information of tens of millions of americans. >> thank you, ascension healthcare >> i'm sure that will go well. >> this is an example -- this is project nightingale. how do they come up with this? project vulture! operation grand slam i said, it takes two to tango, the hospital gave away everything, they got everything. you talk to tim cook, the ceo of apple, the nightmare, they don't want this. and yet here they are, secret thing, i always say these guys need to have better counsel. i always think, okay, let's say, you know, something my friend bruce -- he always says how about a look at front page of
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the journal? awful. >> there it is >> project nightingale do you think it is like -- >> nothing illegal about what they have done but now they have -- >> ascension. >> ascension >> they actually have -- >> how could ascension give that stuff away >> i don't know. >> hey, david, are you on project nightingale? come on. david. >> project -- >> nightingale you can't do this. these companies are under scrutiny for everything they do. the media hates them they wrecked every newspaper in the world. they do project nightingale? >> do you not believe there is benefits to aggregate healthcare and through the machine learning >> there is a lot to do with that data. >> let me just say, of course there is >> of course there is. i wanted apple to go with the
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cleveland clinic to bring big data together. they're afraid they don't want to get people's data >> let's get the opening bell here, the s&p at the cnbc real time exchange. norwegian cruise line at the big board, celebrating the launch of the newest, norwegian encore >> the encore is gorgeous. i think when i saw people getting on, it is all ages, all different people, this is a great bargain. this company distinguishes itself by being far better performer an the rest of the group, 22 cents per share. can you imagine if you're running a business, huge cuban business and then -- no, cuba is out. >> out >> policy term at the nasdaq, five9. >> they're fantastic, i've had them on. they're doing really, really well context. this is the new world. contact centers.
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nobody speaks to anybody, but they figured out -- >> jim, bamle, fund manager survey is out. cash levels dropped to 42. biggest monthly drop since the election of president trump. now the lowest in six years. are people chasing this. does this make sense to you? >> i worry about one thing, we're going to hear from the president, not -- wouldn't it be something if he said, you know what, not only is there no deal, but december, we're going higher and then a lot of people would have bought a lot of things they shouldn't have that said, didn't the fed make it so you can't have cash again? geez, did you see the dr horton numbers? they said this october, so much better than last year's october. because mortgage rates got really low they forced you back into the stock market they really did. i was getting 3% on the cd and feeling really great about it. >> as you should have. >> right >> we're not allowed to own anything 3% of the cd is king
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>> i was king. now i'm pawn >> you got nothing, huh? was it a one year? how many years >> nothing to lose five year. >> one of the best s&pers this morning with rockwell, having its best day in a long time. >> great quarter >> sales up 2 at least in 2020 >> there is an example, someone will come on and say, well, you know what, they lowered expectations, no a great quarter. it really was. it was a great quarter 5g is so strong too. every 5g stock, just every day, re-evaluated so you got rockwell, machinery, you got housing, you have 5g, you have a little 5g, a lot of these companies, like what happened with kemet. there is -- yes, i think people are chasing, but then again they got forced they just got forced in. that's how i feel. like you have to be an s&p index
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fund, you can't make any money in the short-term. >> and, oh, yeah, look where -- >> good get. >> on the 1:00 p.m. today. >> i had nothing to do with that well done. want to hear from him. remember when emerson made a move, tried to make a move on them. >> funny long time ago. >> it was. a couple of years ago. didn't go anywhere. >> no. >> didn't go anywhere at all here's a name that i know you don't like even though you own it cbs viacom down 3%, viacom down the deal is going to close within a month >> glad you brought that up. >> joe ianniello, cbs' ceo on the call they announced some management -- >> good package. >> changes yesterday has a strong pay package, will pay him a great deal of money on close. he won't be with this combined company for very long. >> on clothes? >> no, close. >> oh, close.
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he could buy brione with that package. i'm a believer in viacom down here. >> are you >> yes, i am. >> it is moving down led by affiliate and subscription fee are revenues, up 22% there is concern about increased costs, i think, best you could say at this point. discussing disney plus, but they're just talking about the fact that adjusted operating income decreased 21% from the prior year as a result of increased investment in content. >> that's why they have to merge. >> their own direct to consumer streaming service, cbs all access. >> cut the cost. >> there will be cost synergies, as you know, there was a lot of disappointment with the number when it came out, being lower than many had anticipated. you had a filing in which they indicated the free cash flow characteristics of cbs or what they believe would be lower than people had anticipated.
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>> i think it is like discovery at 20 when you sit down with john, he brought it from 23 to 20, this is going to be like that >> different ogt platform and the scripp numbers, the numbers were low >> they're only a handful of companies that traded five times earnings they tend to be in the auto business and this not like viacom is falling apart. >> no. it is a very -- >> very low multi. >> how come paramount is not a great thing to own they have a great -- paramount used to be the best. >> they did. that's a long time ago >> yeah. >> talking back -- the godfather years. >> yeah. >> did you see the reports of ianniello's comp >> yeah, doing well. >> he's doing well. >> he's not going to be there for the long-term. i hear that from many people, he'll be there maybe for a number of months after close and
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then it will be -- he'll be moving on and bob bakish, the ceo of the combined company will be -- >> they need to pay people less and make more money for shareholders >> is that what you think? >> i think so. the question for viacom, cbs is one of scale and if they're large enough to compete in the world we have been discussing with the launch of disney plus, all the money being spent by so many competitor on the direct to consumer platforms they're taking this hybrid approach, they'll be producing a great deal for those platforms, bakish talked about it, we can produce for our own and also for others which paramount does >> that'sy thoug that's why i ts such a great buy >> you get back to this idea of scale and whether or not all of them need to get together. >> yeah. >> cbs, viacom, discovery, lions gate, stars, amc, get them all
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together. >> pretty good there. >> thank you >> got them all. >> there is plan ty of nenty of food dean foods, a story long in the making. >> what is a shame is that when dean foods split up from white wave, you had this incredible almond milk franchise, all the different soy milk, and they spun that off and sold it for big money and that left them with this horrible milk business where they're just -- they were at the mercy not unlike tyson foods, chicken prices these are hard to gain >> and milk consumption is also gone in the wrong direction. >> you went natural and organic. new generations, they'll make milk out of anything but cows. so hated what happened to the cow. >> chipotle expanding carn carne asada. >> that doesn't save the cow. >> no?
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>> it kills the cow. >> darn it, you're right >> yeah. >> chipotle's come off the 850 level, it hit last month >> i think chipotle is a great buy here the whole group sold off horribly yum collapsed. remember mcdonald's collapsed. >> what are we looking at here >> brian niccol in l.a. with us. >> oh, doug mcmillan. >> who is that >> it is evolve. want to do a panel >> i would love to do that >> didn't you initiate to that trust? >> i like it there are short sellers -- >> hp board. >> activision blizzard had a great quarter. i do not understand why there were sellers yesterday it was, i think the company was very conservative. bobby kotik is a good manager. a solid buy. >> we're going to have --
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>> good lineup. >> how come i wasn't invited to do that? why wasn't i invited to do that? worried about my status. >> when is it? the 19th. >> i'm concerned >> yesterday, we watched shares of walgreens up a lot. walgreens had one of its better days >> yeah. >> boots alliance. kkr made a formal approach to explore a potential leverage buyout of the company. a lot of analysts weighing in with their models. what is interesting is we mentioned how difficult it might be to actually put together the equity for a deal. given the size of the deal >> 16 billion in debt already. >> rolling in as 8 billion, 16.8 billion in debt existing you can put a premium on the equity and you end up with some big numbers. but beyond that, guys, there are a number of analysts saying you pencil it out, the returns don't look that good from doing lbo. not to mention as a number of
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people pointed out to me you would be sidling the company with a great deal of debt when it probably needs as much flexibility as it can have, given the changing environment in which it is operating. >> why did cvs become a health care company the front of the store is being eviscerated by amazon. used to have great comp numbers. they have negative comps the last thing you want to do is load it down with debt and not have anything special. look at -- have you been to rite aid lately with all the debt >> no. there is a cvs on my corner. >> very clean. take a pass. >> yeah. >> you're saying you spent some time in line >> i just think that they loaded that with debt, supposed to make that merger, then your government got involved and blocked it >> my government. >> yeah. and next thing you know, second rate company, i don't want anyone to go under if walgreens took this debt
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down, there is no way they can compete with amazon. do you have amazon just bringing it -- i don't even go for scott paper towels anymore amazon comes in -- >> everything gets delivered >> whatever they think is best. >> yeah. i have a button, i push it tide cups. tide >> tide just comes. >> yeah, i used to go to walgreens for everything. >> has to get in the truck, the guys sit on the corner, unloading the truck, stopping traffic, causing pollution. >> it comes in the big cardboard box. >> the -- >> has to go into -- there say lot that goes into that tide >> teacher teacher. can i -- teacher, can i -- >> plastic bag for the tide and walking home. >> dad -- >> so the late aubrey mcclenen said compare a bottom of milk versus gasoline. milk, the cow, you go like this to the cow, the heck with cow,
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go like this to the cow, they put it in the thing, heat it up and put it in the truck. gas they have to take it out of the ground, take it to be refined, to a truck, to a gas station, it is half the cost of milk aubrey mcclenen. >> interesting point >> over a bottle of colgen >> great don't worry. >> are we out of things to talk about? >> yes. >> no! come on! that's unfair! that's unfair! i'm just -- >> time to go to pisani, carl. >> dean foods, how -- >> what do we do until we know what the president is going to say? >> president navarro or mnuchin? >> right does this get signed by year end? does he renew attack on the fed. >> come out tough. >> i'm thinking about that cash level and the stock like nike,
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chinese stock which is flying. new york times insinuated that mark parker was involved with the terrible -- >> with the sal dazar stuff. >> as a reason for his departure. >> i don't think it is true. i don't know >> nike is hanging in there today. the top performing dow name with merck. boeing is the drag, which live by boeing, die by boeing. >> microsoft continuing to break out. microsoft avoiding all the scrutiny of project nightingale by agreeing with the california privacy act. >> alphabet is up. nobody cares google is up, not down didn't hurt by having all those tens of millions of medical -- >> wait until congress gets involved roku continues to benefit every time someone has a good package. disney, roku roku roku roku we're out of things to talk about. >> people having a tough time getting on to disney plus. aren't they? >> it is not a joke.
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>> no, they out they had it alld out. >> i guess they weren't anticipating how much people want the product. >> profile of kevin mayer yesterday, whose nickname is buzz light-year internally, engineer by training >> there is going to be an interesting battle between three executives at that company to ascend to mr. iger's position when he steps down in 2021 and mayer is one of them. >> yes working on rockwell animation. >> yes the exchange today >> you read that stuff >> let's get to bob pisani and see what's moving. hey, bob. >> happy tuesday, everybody. 3093, the old high on the s&p. we're essentially there, maybe a point or two short europe doing well. asia doing well. japan, another big standout to the.
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indeterminate open here as we wait for the president here. semis up, a little trade materials, that's a good sign. utilities slightly on the upside ba banks, terrific run. all the department stores are weak, macy's, nordstrom's, kohl's on the downside the really big story has been the interest rate move that we have been seeing in the last couple of weeks. this is really starting to move some things here here is the tlt. this is the ishares. almost $20 billion in assets you see it topped out in september and this big move down yields going up. we had 1.2 billion in outflows in this in the last week it is finally starting to happen outflows from some bond funds. is this a lot? it had almost $20 billion in assets under management. that is almost 6% of the assets under management is that a little, a lot? that's a lot very noticeable. we have been waiting for this for years. when will people finally start looking at this and saying, we're at the bottom in yields, start moving up, maybe this was
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first start of it. we have seen some great moves in the banks recently on this kind of play. european banks have had a great start to the month paribas, ing, they're all up four, five, six, seven, 8% banks here at new highs, the big super regional banks, all doing very well. autos up over in europe and there, of course, is the cyclical play out there. in the u.s., in addition to the banks, we have seen nice moves up in some different groups here, mostly cyclicals transportations, new highs materials, close, staples, and utilities, defensive plays in reits down this month. there is the belief that simply put there is not going to be a recession in 2020 and global growth may not be as bad as some people feared. that's the simple we to describe this whole story there say lot more bullishness among fund managers. like to watch that bank of america, global funds survey they do it every month 150 or so global fund managers
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global growth expected to improve in 2020. you might say that's boring. they have been pessimistic all year on global growth in 2020. this is the first time they have turned very bullish on the idea that maybe things are not as bad. that's what i'm talking about. yield curve is steeper they weren't sure about that up until the recent survey this is a change in sentiment, most crowded trade, long u.s. technology and growth stocks that's interesting the most crowded trade for ages was go long, u.s. treasuries that was the big trade that's now reversing that supports the idea that people are starting to sell some of those bond funds that held up for so long. and the fed, 84% said the fed won't raise before the election in 2020. the election in 2020 there is a little bit of a risk. because of the fed, if they get more hawkish, that position will be a little bit on the long side but this is a real change in sentiment, reflecting the idea of recession off the table in 2020 maybe global growth will be a little bit better than expected. carl, back to you. >> we'll see you in a little
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while. bob pisani, to rick santelli in chicago. good morning, rick >> good morning, carl. let's build on what bob pisani so accurately described. global negative interest rates, the pool of yields under zero has been shrinking global interest rates have been going up much of the policies and mario draghi's last couple of meetings seems to be on the outs with regards to finance ministers throughout europe. and, of course, there is a lot more talk bubbling up about more fiscal stimulus than some of the more aonies with regard to europe think germany here, potentially even france. and as some of these things start to work through the system, we are seeing an exodus of bond funds. look at 24-hour chart of ten-year note yields, long end down a basis point or two. 10s minus 2s hovering around 26. still only two basis points away from the steepest of 2019. look at end of july chart of 10s, we're basically hovering at near 15-week highs, last time we
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were at this level on ongoing closing basis was the end of july bunds, look at one week of bunds at levels we haven't seen since mid-july hovering at near 17-week high yields at minus 24 minus 24 is basically the high negative yield close meaning, of course, we're getting ever closer to zero. look at the july 1st start of bunds, you see what i'm talking about. and finally, when it comes to the spreads, how much investors are willing to take on the risk side to get more yield, well, the barclays investment grade, 107 over is quite tight. that's one-year chart. there isn't any nervousness now on a risk-on environment and the treasury and corporate yield markets. carl, david, jim, back to you. >> all right, rick, we'll see you in a little bit. rick santelli. check out our podcast. listen to the opening bell hour of "squawk on the street" at
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there's a look at disney and netflix. as a stock year to date netflix had been leading disney but that changed in july and disney's gains are now more than double that of netflix r fothe year stop trading with jim in a moment ♪ ♪ ♪ ♪
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♪ ♪ ♪ ♪ ♪
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time for jim and stop trading. >> tesla has become more controversial of late. now they have a tesla pick-up truck ahead of the unveil. morgan stanley talking about the new pick-up, the spacex facility i don't know i mean this is the most profitable segment of all of vehicles and this is going to cause the stock to continue to levitate even though a lot hate the balance sheet but this is -- they have a pick-up and it's ev. i think it could sell. >> that's jonas today out of morgan stanley. >> very good piece. >> what's tonight, jim >> i've got one of my most exciting, i think, stocks is micron that's been my bellwether of how semis will do and then john rainy of paypal, salute to the troops, they have november is their whole month of salute to
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the troops which i like, feels like that was them and we're on to the next i don't like that. there should be a longer time period and one of the reasons why i think they have a hard time finding jobs that was a good day, thank you for your service no, thank you for your job we're staying on that issue because the vets get treated very short lived in terms of their -- the affection we show them. >> we'll see you tonight "mad money" is at 6:00 p.m. eastern time when we come back, reaction to the debut of disney plus and what's at stake for the streaming wars (vo) the flock blindly falls into formation. flying south for the winter. they never stray from their predetermined path.
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long-awaited disney plus means for the media landscape. >> job cuts at juul. slashing nearly a billion in costs next year. >> game on take two interactive ceo will join us on set for a cnbc exclusive. we will talk about the gaming sector and the company's last quarter just reported last week. we begin with disney and the launch of its long awaited streaming service. joining us industry veteran and usa network founder and former ceo kay coplavictsibility who rn springboard enterprises. when founder of usa you were credited with pioneering the two revenue streams involved with cable, licensing and advertising. do you think they're doing enough for what they could be garnering for this type of product? >> i think direct to the consumer is the play of the day. that's where we're going i think they are spending a tremendous amount of capital to make this new market, it's a new
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model, it's direct to consumer and it really allows the consumer to move around pretty freely, which was not true during the cable industry introductions when i started usa network. it was really bundled and now it's unbundling everything so it's a different opportunity today, but i do think there are a lot of avenues for content to be seen and now we're seeing the disney launch today. >> do you ultimately see 10, 20 years down the road it gets rebundled from here? >> i do think there will be a rebundling i think that disney, everybody is talking about disney plus, but disney plus, espn plus, hulu for $12.99 a month is a pretty attractive bundle for a lot of people the disney plus is very attractive for families, for kids i think the launch today at 6:00 a.m. is kind of a sign that they're going after the family audience and not launching last night at midnight, as some of the other streaming services did. kids aren't really up at
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midnight but they are up at 6:00 a.m. oftentimes i think they have a different tone to it, launching and made a play for the family i think. >> we were having the conversation earlier, kay, about the profitability of the model that is now being abandoned, how great it was you were a part of that, of course, having, you know, as many as 100 million people in your universe, all of them paying, most of them not watching. >> yeah. >> can this ever replace that in terms of the profitability or is it simply going to be a margin that is not going to equate to what was seen previously >> i do think that the model that i created in the cable industry of two revenue streams and subscriber revenues that were very significant, actually more significant than the advertising revenues as they played out, i think that's going to be hard to match in the streaming world. i think it's a matter of millions and millions of people, hundreds of millions of people, subscribing at lower margins to the --
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>> you have global scale here, though, that's available in a way you didn't previously. netflix, for example more subscribers outside the u.s. borders than inside. >> it's interesting. digital tv is projecting by 2025 for netflix to have 257 million subbe describers, next level down, amazon 135 subscribers, next level down disney at 101 million subscribers, which would actually meet their stated goal for where they would hit profitability. you have to have hundreds of millions of subscribers to make that happen. >> we were playing some sound earlier from iger a few years ago, when the thinking was netflix is a great marginal customer for your content and they were sending great cash flow your way. what happened to that argument and is it still as -- what are they giving away as they start keeping their content within their own walls? >> i mean they still have the opportunity -- yes, they want to keep it in their own balwalls because they want people to
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subscribe to their streaming service. exciting content for marvel and pixar and star wars and all of their own disney products. it's very exciting for the subscriber i think it's starting off with a lot of older series which are classics, pin noekco and snow white and the seven dwarfs what is old is new again i guess. they have a lot of opportunity. they can still distribute through others if they want to down the line. i think we won't see that for a number of years because they want to keep everything in-house, but you know, there are other streaming services -- what is interesting about disney play here is that they signed up with verizon also and verizon has, what, 118 million subscribers on cellar, that's a play to sort of, i think, checkmate at&t that has a warner and is depending on hbo plus to drive their services
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disney is going to the number two cellular company to get free for a year why are they doing that? they're doing that to get people signed up and used to having the service. >> it jumps to numbers. >> at&t is doing through their cellular. >> or amazon to sell prime it's become like milk at the grocery store. >> exactly but i do think that the subscriber will start to get confused and probably will sign up for those that really feel -- they feel they really want to watch. they're not going to sign up for 18 or 20 different streaming services i think that eventually people will start to have their own little bundle that they'll make. the consumer will be the charge of which ones they choose now. that was not true when i launched usa >> do you expect people from the beginning to sign up for a bunch of these things and sort through it or do you think people will wait and see what product, which streaming product, has the hits they want to be watching and that people are buzzing about and then choose to sign up
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>> i think that they're very inexpensive to sign up for, disney at $6.99 a month, you could try it for a month and see if you like it you can be on one of the free services same thing with at&t netflix doesn't do the same thing. they don't need to they're so out in front. they've captured a big majority of the u.s. customer that they're going to get i think they're only projecting another 6 or 7 million u.s. customers at this time a lot of it is international they don't need to do that they've got the customers. i think people will stay with them i don't think people will abandon them just because disney is there or at&t is there or hbo plus is there. they'll choose i think that probably netflix is far enough out in front in capturing, you know, the majority of the audience they need in the united states. they're going for the international market now >> if they're anything like me they will sign up and forget to cancel and have subscriptions that stick around.
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>> i think that happens as well, so we'll see what the future brings. but it's a much harder marketing ploy today with, you know -- you've got to market each one of these to the consumer and i think that the consumer is going to get overload. >> yeah. kay, thank you so much for joining us. >> thank you julia boorstin joins us now. she has more on the details of the streaming service. also, julia, we foe thknow that been difficulties, a high class problem, people have had a hard time connecting, haven't they? >> there were hiccups when the service went live at 6:00 a.m. eastern. 7,000 people roughly reported streaming errors this morning on down detector, which is a service that monitors how many people are complaining of problems disney got back to us in response to all those reports of streaming errors saying the consumer demand for disney plus has exceeded our expectations. we are pleased by this
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incredible response and working to quickly resolve the current user issue we appreciate your patience. interesting to see here. disney knew that there was going to be a lot of demand for this product on the first day they had people sign up early, but seems like they did have some hiccups as it got off the ground guys >> any ideas here in terms of what their expectations might be we've mentioned the partnership with verizon which certainly will have an effective jump starting potential subscriber roles and they have given sense as to what their expectations are over time. >> over time disney has given us guidance for 60 to 90 million by the year 2024, 90 million subscribers. big picture guidance for the future really no short-term guidance. we know that this verizon partnership subscribers of verizon's unlimited plan will get a year free of disney so we know that they're going to have these partnerships in place to
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really get the service off the ground, but the company itself has not told us how many subscribers they expect to have in the first couple quarters and it will be interesting to see how sampling the fact that they are offering, you know, free trials helps get it off the ground also, the marketing efforts, we have to remember that disney does have direct relationships with consumers for all those people who visit the parks, go on the cruises, et cetera. i know also the question is, when you have this option of dropping out after only a month, people could try it and drop it, how much disney really tries to encourage people to do the annual plan or even sign up for three years. it's $7 a month but only $70 a year whether they can incentivize people to lock in the subscription for a year they won't have to worry as much about churn. >> we will watch that. the street's top media analyst forecasting that disney plus will add 8 million by year end. michael is the founding partner here with us at post nine.
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welcome. >> good to see you. >> who are they taking subs from >> i think they're taking subs from the open market i don't see this as a zero sum game right now there's so many opportunities to basically add people that it's -- we're in the beginning it's nowhere near taking from amazon or netflix. >> we mentioned this harris poll in the journal yesterday i think a third of americans said they would cancel likely cancel netflix in three months to make room for a new that's not too reassuring for netflix. >> it's funny. we have a neutral to negative view of netflix. the valuation has always been a concern. when we do survey work we find that a lot of library content is perceived to be valuable by consumers of netflix i don't know if it's going to lead to churn of that magnitude, but i think the road going forward tore these companies is more challenging where we came from original content, manage churn, work on partnerships that discount the product.
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>> i.t. >> exactly it's a -- >> marketing in a way you didn't, cable companies do a lot of it for you. >> we came from a world that was great, right 90 million americans paid for tv everyone paid for it the cable guys, you know, drove, you know, the fibers to your home media guys sat back and got paid for everyone now the world is changing, right. >> yeah. that's -- we've been talking about that very thing, michael do you expect, you know, it's funny when i sat down with tanky a couple weeks ago, rolled out, haven't started it yet but hbo max and the others, are we going to be in a world where all the content produced by these companies is for their direct to consumer platforms, virtually all of it. >> i would say for the most part, maybe 20, 30% they make goes to other people but we're in a world now of like librarying to yourself basically self-funding and self-creating. but the occasional show will find its way over. you will line up all these companies with their production
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facilities and platforms and that's what's changing too. >> with your subscriber projections there, are investors looking for just the pure numbers, almost like a start-up tech company would, or almost like they would be looking for a startup tech company or monetization out of the gate here >> i think we're in the -- in a bit of a momentum for disney, it's a momentum trade. how many subs. this is the way netflix has been for five to ten years. worry about making money later let's get some subs and aggregate as fast as we can and worry about the economics down the road so disney's trading on the anticipation of a big opportunity. >> we're going to be focused on the same way with netflix now, every quarter with disney? they have seemed to have done a good job of their shareholder base for this idea we're going to be spending money and the numbers may not be what you would anticipate they would be two years ago. >> right. >> but so what. >> that was a key transition, right. you were there they basically said we're going
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to lose this much money and we're okay as a company and the street said we're okay with that too if you deliver the goods we're focused on subscriber metric right they've done a great job in redirecting our attention from the bottom line to the subscriber forecast number. >> this is disney, so, you know, you've got a situation where the stock price has been rising in anticipation of this, but you all have been actually lowering your forecasts for earnings estimates. is that going to come back to haunt the stock price? >> my first rule of thumb after being an analyst is, earnings revisions drive stock prices, right. numbers go up, stocks go up. numbers go down, stocks go down. this is the odd example of where numbers came down dramatically and the stock has gone up. to all your questions, the metrics have changed, right. the metrics are all about growing the top line, not about eps right now. >> we'll see if that happens with the s&p. >> yeah. >> if forward projections go down you're not as constructive on our parent despite some arguments that it benefits the broadband universe, others say
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it is a point of indifference between your content sales and your broadband sales >> yeah. it's my partner craig, the moffit in the firm, has a positive view on cable but more worried view about nbc and he would like the sky acquisition if comcast traded as cable only, we would be as bullish on that as charter and we like that business a lot it's the media business they own drags down the multiple. that's craig's call. >> let me come back -- you come prepared something today before we le you go, cbs reported earnings, stock down 4%, viacom down a like amount. what was wrong with the quarter? >> i think it's to maybe leslie's question or your point about selling the story. they're also transitioning into a more tc world, but they've not really yet broken out the cost of dtc. you see in the cash flow, but don't really see it on the income statement, right. i think they need to reframe expectations they're spending a ton of money
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and talked about 30 to 40% more hours -- >> 94 shows something like that. >> year off year that's a major investment and not seeing the benefits come through as clearly they're coming through but they need to be more transparent in their financials to sell the story, right and i think the big takeaway for me, what disney sold is a massive lifeboat between hulu and espn plus and disney plus, they have this big opportunity to transin this a scaled way and cbs has to convince people they have the same scaled opportunity. singles and doubles won't do s this has to be a triple. it has to be big enough to get people to look past the investment spending and the big picture, right i think it's a communications strategy opportunity for cbs -- >> you don't think it's demographic related. older people tend to watch cbs i don't know that's just -- >> that's true, but, you know, ott, they're trying to get younger consumers and showtime and they're going to put more
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sports on cbs all access it has to be the belief of this is really a lifeboat this helpsour business to make it a bigger business creative to growth they're telling us that on their earnings call but you don't see it in the numbers. disney broke it out, took the band out and said $4 billion of losses, deal with it you know >> to quote roy, they may need a bigger boat. >> yes. >> bigger lifeboat. >> universal. >> carl, good seeing you. >> every time it comes on i can still watch it. still to come, don't miss a cnbc exclusive, we have take two interactive ceo zelnick who will break down the quarter and the gaming sector as well. first morgan brennan is live from rocket city usa and she has a look at what is still ahead. morgan >> oh, and there is so much ahead, david 50 years ago this test stand was used for saturn 5 for the rocket
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plan speaking to the role the commercial sector is playing in the new space era. for a city is famous for rocket science there is more to the growthto f sryor huntsville and we have that story coming up after the break.
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welcome back morgan brenp is live from rocket city usa taking a look at how it isn't just aerospace and defense companies making their way down to huntsville, alabama, it's morgan as well
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>> hey, leslie, that's right so huntsville's economic growth has taken off really like a rocket from 2000 to 2017 the huntsville metro area has grown jobs, wages and population at roughly double the national rate and at a time where u.s. unemployment is sitting right near a five decade low, the rate here is lower 2.1% government plays a huge role in that, but so, too, do companies that are increasingly pouring billions into the area not just aerospace and defense it's called rocket city usa. home to the highest concentration of engineers per capita and educational system that teaches s.t.e.m. starting in elementary school and a long-standing ties to aerospace and defense. >> we have legacy, so our aerospace hert annual,we work very hard on that to make sure we maintain that about 400 aerospace companies in our market, so very rich concentration of them and a lot
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of expansion in that. >> reporter: huntsville is a manufacturing hub catering to more than just the federal government polaris spent $190 million to open a factory here just three years ago, assembling slingshot and ranger vehicles, after vetting 100 sites across 16 states, the ceo says it was an easy decision. >> i think the long-standing commitment to engineering that's been in huntsville for so many years since world war ii really and then with the redstone arsenal there and the army stratcom there as well, there's really a good infrastructure of personnel. >> reporter: polaris isn't alone. last year ge aviation opened an advanced materials facility and earlier this year lg announced plans to build a new solar panel plant. toyota is expanding an the automakers joint venture with mazda is building a $1.6 billion factory set to open in 2021.
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tech is taking up residence with facebook building a data center. >> we've always been, you can call it picky, we call it selective. >> reporter: and the list goes on cummings research park a couple miles from here, one of the largest research parks in the world home to more than 300 companies including a nonprofit biocollective called hudson alpha institute focused on genoming sequencing. expansion on law enforcement the fbi is in the process of building out what it's referring to as an hq2 down here at redstone arsenal focused not just on ballistics and explosives but also areas like cyber. lawmakers and local officials have been crucial to the cultivation of all of this business we're going to be speaking to one of the biggest driving forces in all of that, senator richard shelby, the chairman of the senate appropriations committee, exclusively in the
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next hour coming up on "squawk alley. guys >> morgan, what kinds of subsidies, tax incentives have been put in place down there to really help cultivate this type of economic growth >> yeah. it's a great question, and certainly you see those types of incentives offered down here something we'll be talking about in the next hour as well case in point that $1.6 billion toyota/maza factory that we just mentioned in the package, it was an $800 million incentives package here, but you saw other states like south carolina, i believe, put a package together that was worth more than a billion dollars and yet that facility, those companies, the joint venture decided to come here instead i think it's a confluence of things the transportation and the infrastructure, this highly skilled labor down here, a real focus on education and, of course, a very low cost of living, a lot of affordability >> all right well stay warm down there. looks a little chilly down south.
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>> it's snowing! it's colder here than new york right now. we're having a crazy storm >> cold front indeed when we return, job cuts at juul we will fill you in on the latest moves from the e-cig maker as the vape debate rages on more "squawk on the street" when we return. it was sophie's big day. by the way, she's the next mozart. as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places.
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e-cig maker juul confirming plans to reduce costs by nearly a billion dollars next year. frank joins us with more on that today. >> good morning, carl. juul is going to cut 650 jobs an increase from a previous plan to cut about 500 jobs the cuts represent more than 15% of the workforce and they are dramatic reversal of fortune for the e-cigarette maker. this chart shows juul's hiring and the plunge for the start-up that had been hiring about 300 new employees per month. juul reduced its spending by a about a billion dollars next year making cuts to its budget for marketing and government affairs. according to a bloomberg report from this year the company expected revenues to exceed $3.4 billion in 2019. these cuts come as juul
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announced it has halted sales of mint pods where it gets 70% of revenues in the u.s. and product advertising. juul's actively working to reshape public perception and it's been widely seen as a major cause for 28% of high school students and more than 10% of middle school students using e-cigarettes the company underwent a major restructuring in september former ceo kevin burns replaced by casey crosswait today mr. crosthwaite saying as the vapor category undergoes a necessary re-set, this reorgs will help juul labs focus on reducing underage use, creating new technologies while earning a license to operate in the u.s. and around the world now juul still faces scrutiny from regulators over the safety of its product and its past marketing practices. however its biggest regulatory hurdle is likely to come juul must submit applications to the fda by may of 2020 just to
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stay on the market back over to you. >> frank, thank you so much. it's time now for our etf spotlight. taking a look at the ishares u.s. aerospace and defense ticker ita coming off its fifth positive session in a row and up more that be 30% so far this year meanwhile, boeing moving lower this morning after posting its biggest day since june investors watching for october orders to be announced this morning. time to send it over to sue herera and a check of what is happening this hour. >> good morning, david good morning, everyone here's what's happening at this hour the supreme court is letting a lawsuit proceed against the maker of the rifle used in the sandy hook elementary school shooting the justices rejected an appeal from remington arms. they argued that the 2005 federal law shields firearm makers from most lawsuits when their products are used in crimes. former president jimmy carter recovering from surgery at emory university hospital the surgery was to relieve
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pressure on his brain. the procedure meant to resolve bleeding due to his recent falls. israel killed a top commander from the iranian backed palestinian militant groups islamic jihad a rare targeted strike in the strip. dozens of rockets could be heard fired towards southern israel from gaz ja "squaa. a witness storm warning in effect buffalo's airport receiving 7 inches of snow breaking the record for snowfall by november 11th and we're just getting started that's the news update this hour i'll send it back downtown to you. less leslie >> i'm not ready for. ♪ yet it feels early. >> it's amazing, right. >> truly amazing thank you. as we go to break, take a look at shares of take two interactive soaring more than 800% since strauss zelnick
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became ceo in 2011 he will join us on set next in a cnbc exclusive don't go away. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪
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the amount of student loan debt i have, i'm embarrassed to even say. we just decided we didn't want debt any longer. ♪ i didn't realize how easy investing could be. i'm picking companies that i believe in. ♪ i think sofi money is amazing. ♪
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thank you sofi. sofi thank you, we love you. ♪ take two interactive coming off a strong quarter boosted by results from the company's nba, grand theft auto and redemption franchises joining us to give more insight is the chairman and ceo strauss zelnick. always good to have you. you know, want to start off just on digital distribution of the games itself it went up dramatically, what, 51 -- 50% up from 31% last year. is that just going to keep increasing in that rate? >> in the quarter about 70% digitally distributed. it will keep going up. you can pretty much assume that interactive entertainment business will be a digitally delivered business in the future. >> how much cost does that end up taking out?
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>> it does increase our margins. in terms of our margin dollars it could be as much as $5 a unit in the u.s. and $15 outside of the u.s. very significant. >> you had a good quarter by more or less any way you measure it stock didn't really respond. the tease for you, we talked about the incredible appreciation since you've been ceo since 2011, the stock only up 3.5%. are you disappointed >> we always want to tell a great story and you want the chart to rise. we're proud of our results the results continue to improve, having an amazing year this year, the quarter up 63%, $950 million in net bookings, recurrent consumer spending up 39%, and we have hits across the board. that's really all that we can ask for. my view is that the stock will always trade on the fundamentals over time. i think, you know, there was some time where the sector was
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rerated and we come out of that. >> you have come out of that you believe? >> as a sector in terms of our company, you know, we show up, we do our job, we execute and create hits, everything else works out fine. >> what's your rate on the consumer heading into the holiday season this year >> feels good to us. we've been putting out hit titles, launched and sold 7 million units. grand theft auto 5 has sold 115 million units. nba has sold 6 million units a great launch of the outer world. when you put out something great the consumer shows up. i don't see any signs that is changing it doesn't mean it won't i haven't seen it. >> 5g, anything we don't yet know about 5g that's going to impact gaming? >> i think it will be a good thing for gaming it's hard to know exactly how it will change because so much of gaming is delivered by cable, obviously. it's not clear how 5g will
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affect that. in terms of mobile gaming, in terms of that last move, that last few feet or, you know, less than a mile from cable over the air to the consumer 5g should help a lot. >> will the experience feel different? >> i think so. >> really? the experience should be quicker and richer it's being promised that way remains to be seen. >> do you leverage that in your marketing or is it just too granular, too much engineering for the consumer to understand >> there's really, what we market is a great experience, market great hits, we market stories and graphics and game play i think, you know, marketing technology doesn't really resonate with the consumers. >> strauss, we spent a lot of time this morning talking about the launch of disney plus. yet another one perhaps of the more significant streaming services now available to consumers. what about time spent? you're competing against the likes of others who would look at or watch programs as opposed to play games. what are your expectations when it comes to time spent by your audience on games versus watching the latest series >> it's a great question
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the average american household spends about 150 hours a month on linear entertainment. only about 40 or 45 hours a month on interactive entertainmentpp we have a lot of growth ahead of us we hope the good news, the average able of a gamer is 37 and new people are entering the market all the time and we continue to enjoy the entertainment for our lives that we loved when 17 years old. just because you turned 38 you don't stop playing interactive entertainment. so our cohort should grow for the next 20 or 25 years and i think you'll see that be reflected in an increase in share. >> meanwhile the media day continues to expand. >> right. >> it's 12 hours now and there's no signs that it's slowing down. >> you got to compete with sleep, as reed hastings has said. >> and eating and working. >>and working out. >> i knew you were -- i knew that was going to come up at some point. >> your case is 12 or 15 hours a day. >> my wife might be watching not going there. >> as consumers become more
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accustomed to subscriptions, do you think about your model in terms of whether or not it might make sense to become more of a subscription service. >> we try to be thoughtful about everything we see changing, next week, next quarter, five years, ten years and we see changes in technology, which is reflected in streaming launches, and changes in models which could include subscription models. there are models for interactive entertainment. starts with what's great for the consumer, how are we delivering the good to the consumer unlike linear entertainment where you watch 150 hours, watching over 100 titles for our 40 or 45 hours a month that may just reflect the use of one, two or three titles, that may make less sense for a $20 or $15 monthly subscription, especially if you play that title for, you know, four or five or six months at a time maybe subscription is not such a good deal for you.
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we need to find the intersection of what works for the consumer and the publisher and the creators that sweet spot is what's going to tell you whether subscription, for example, or any other model, would meat fat for our business we have to be where the kurm is. >> how are people in your business thinking about china and their take on restrictions on gaming, curfews, that kind of thing? >> it's a growth business for us and the restrictions have been eased and approvals have been enhanced i am hopeful that the trade issues between the u.s. and china will be resolved i believe they will be i've been bullish on china i think it's a growth market i've been more optimistic than most, although i say to our investors don't underwrite to my opinions but i do believe that in three or five years, probably it will take that long, that china will begin to believe that enabling western entertainment to be broadly distributed in china be won't create any kind of issues. right now it's already a pretty big business for us, material business for us.
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for example, nba 2 k on line is the number sports title in china with 47 million registered users and recurrent consumer spending was up 27% on that title in the quarter. we have great hopes in the future. >> how are you thinking about sports betting there was an article in the journal talking about how 5g could be a boom for sports betting. you have a few sports franchises in your portfolio. do you see that as any kind of competitive threat >> i think it's an opportunity for us we obviously don't have any exposure to betting whatsoever and we obviously are a highly compliant company. anything we do will be consistent with regulations and what's expected of us from consumers and parents in terms of being forthcoming about what we're offering i think sports betting in the u.s. this is not an unconventional opinion, it's going to be huge and do i think it will involve the interactive entertainment business at some point, certainly. >> how is it an opportunity for you? >> perhaps something with regard
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to our basketball game the commissioner of basketball has been pretty excited about the potential for sports betting. >> in synergies there. >> on the other hand that title is an everyone title, available to families and kids we have to be careful if we were to ever be involved in that business we have to be careful about how we treat our consumers. >> you talk basketball and your optimism on china is sort of belied by the episode we went through regarding the rockets and the nba and they're still touchy, obviously. what will it -- why do you remain convinced they will look past this in a few years >> look, china is always going to be a market where we have to be very careful about the way we do business and it's challenging for americans to think of it that way we want to be true to ourselves as well and try to find that right balance. i do believe that as a matter of economics, the economic opportunity will exist we have to make sure that the social opportunity as american
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companies also exist >> you like linear entertainment companies are reliant on creative talent for whatever the next product will be or enhancing the current products are you finding them more expensive? when it comes to the content and streaming wars, they are coming at a very rich price is that similar in gaming these days >> you know our creative talent is largely a part of our company. they're largely our colleagues unlike the motion picture business where largely the creative talent resides outside the business, where the studio system no longer exists and hasn't existed since 1955, the studio system still does exist largely in the interactive entertainment business that means we're all in it together we're actually thrilled to be able to compensate our creative folks in the way that they deserve to be compensated. we've made the it very plain we share with our creative folks. we have a sharing mechanism. that's a win/win our creative folks are aligned with our shareholders as our
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products do well, our creative folks do well and shareholders do well. said another way, i would never want someone to walk across the street because they could get paid more. we have the best talent in the business and we have to pay them appropriately. >> i was playing with my kids the game of life remember that game one of the careers you can draw is a video game designer. >> oh, good. >> is the market intense for that job right now and where are you drawing from >> it is really intense. i think we have something like 500 open positions and we have 5,000 employees. we have exceedingly low attrition, something like 2 or 3% a year, lower than the industry average we're drawing from university towns. studios all over the u.s. and all over the world but generally we want to be near universities because they are turning out educated people who can create programming and software and also create the art that makes great video games. >> speaking of the increase in cost of content you are the interim chairman of cbs. not going to have that job much longer they reported a quarter not being responded well to this
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morning in part because they have to keep spending more money for new content. is that what you would come to expect when you look at that industry >> i think it will change. i think with the entry of numerous players into the streaming business, and the belief that you have to spend a lot more to compete with netflix and others, spending has gone way up as the business rationalizes and companies like netflix realize there's probably not going to be one winner takes all, you've got to compete with disney plus, and you've got to compete with cbs all access and all the other offerings and americans only want two or three services, i think you're going to see content spending actually move back from peak television and i think it will rationalize and i think that will benefit the key players. it's going to put pressure on everyone who is in the business, as it always does, to create hits you can't just double your spending and expect to double your hits. doesn't usually work that way. you have to make great creative properties and there is a way to do that without spending unlimited sums of money. >> not easy though >> nothing is easy. >> it isn't. strauss, always appreciate you
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joining us >> thanks for having me. >> strauss zelnick. >> as we go to break markets having a very good day, considering the quiet open we did hit 3100 on the s&p two points above that for the time being don'gowat ay. as a principal i can tell you this. when one student gets left behind, we all get left behind. this is a problem that affects each and every one of us. together with ibm, we created a whole new kind of school called p-tech. within six years, a college degree, and a pathway to a competitive job. you know what's going up today? my poster. today, there are more than a hundred thousand p-tech students around the world. it's a game changer. - [spokesman] if you've tried colleg(group cheering)shed, snhu lets you transfer up to 90 credits toward you bachelor's degree. - [woman] it doesn't matter how old you are, you can do it, you can finish. - [spokesman] finish your degree at every year, our analysts visit thousands of companies,
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if you're buying the broad markets one top strategist says you may be about to get burned find out more on more "squawk on the street" coming up.
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welcome back to "squawk on the street." rick santelli here live with a really cool guest. johnny fine from goldman sachs johnny, welcome to chicago. >> thanks for having me. >> let's get right into it if you look at the returns so far this year for investment grade and high yield, 14% and 12%. but yet even though it's one of the best performing sectors, it's also garnerings the most pessimism regarding the future triple bs, leveraged loans, things are starting to get to a point where they're very large
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is large bad >> not at all. a lot of people are focused on the amount of debt that's coming due in the next five years to around $4 trillion we had $3.7 trillion come due in the last five years. we navigated a lot of challenges in those last five years, and we refinanced very, very well indeed i'm not concerned about that, rick. >> when we think of the notion that when paper disappears, well paper disappears the investors get their money back corporations to lock and load paper out there, there's a big pile of cash in investors' hands to do it >> and companies that spend a lot of time the last couple years in particular really fortifying balance sheets, actively managing liability profiles longer. over the course of the last five years, yes, we have seen a lot of growth investment grade debt, but a lot of that has very long maturity now it is not a refinancing problem. ultimately the money comes due
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back into investors to reinvest is going to find a scarcity of supply to meet it. >> bbbs, they've grown that's the lowest rung of investment grade they say it is close to 2.5 trillion double the size of the junk bond market if things deteriorate a bit, conventional wisdom goes giant pool on the last round of investment grade will slip and create an issue. on your final thoughts, tell me why even though a possibility, it may not be the best case for how it turns out >> ultimately those are the largest debts we have actively managed leverage to ensure delevering if they have large balance sheets or pushing out maturities to sustain head winds the market may give them remember, this year we have seen 50 billion upgraded to investment grade only 15 has gone the other way sure, the trend can shift if we
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see a meaningful deterioration in economic activity, but as of now, it would appear the economy is in good balance, and ultimately we can sustain a lower level of output which should be healthy, bbbs will do just fine. >> real quickly. switch gears go to sovereign debt moody's outlook for 2020 is not optimistic we have seen 12.5 trillion, a smaller number of negative yielding debt from august to 17 trillion do you think there's anything positive on the horizon by central bankers in sovereign debt rates >> clearly the big problem and big question everyone will grapple with is can there be effective handle for monetary policy to fiscal policy, particularly in europe ultimately while there has been downgrade of sovereign outlook by moodies that hit the wires, i don't think it creates shock waves, it will be manageable for
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the broader market. >> great to hear your thoughts in person. carl quintanilla, back to you. >> thank you, rick santelli. as we go to break, look at chipotle, announcing they're extendingthe run of car carne asada. it was the first protein addition since 2016. dow up 65. don't go away. - at southern new hampshire university, we believe in education built for all people. - [woman] snhu was the best experience of my life.
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welcome back to "squawk on the street." i am seema mody. stocks trading at the best levels of the day as we await comments from president trump. fresh 52 week highs, including the industrials. that's the second best performing sector year to date, thanks in large part to rockwell automation best day in a decade earnings beat forecasts. shift in digital is starting to pay off. that's a trend across the broader industry with names like honeywell. carl, back to you. >> thank you very much. as we go to break, we go back out to huntsville, alabama. morgan brennan has more on space from rocket city, usa. record highs for the s&p and nasdaq don't go away. heading into retirement you want to follow your passions
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high protein. low sugar. tastes great! high protein. low sugar. so good! high protein. low sugar. mmmm, birthday cake! pure protein. the best combination for every fitness routine. with sofi, get your credit cards right- by consolidating your credit card debt into one monthly payment. and get your interest rate right. so you can save big. get a no-fee personal loan up to $100k. getting some breaking delivery numbers from boeing we're going to phil lebeau >> net orders for boeing in the
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month of october fell by 11. 11 orders disappeared from the order book for boeing in the month of october because their customers opted out of orders for 18737 maxes. they're going to other planes. net orders dropped for the year from 56 down to 45 they have net orders of 45 planes for the year. the backlog for the 737 max is at more than 400 planes. on commercial deliveries, delivered 20 airplanes in october. year to date, this is where you see the impact on cash flow. drops from 625 year to date last year to 321 this year. down to morgan brennan in hun s huntsville, alabama. >> reporter: thank you it is 10:00 a.m. in rocket city


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